Unipec: U.S. ANS Destined for Sinopec

Maritime Activity Reports, Inc.

July 22, 2016

Arbitrage opens after ANS discount widen on ample supplies.

Unipec, the trading arm of top Asian refiner Sinopec, has bought two U.S. crude cargoes, including a rare purchase of Alaskan North Slope (ANS) for its refineries in China, trade sources said on Friday.

China, along with Japan, have shipped crude from the United States to Asia, since the U.S. lifted a 40-year-old ban on crude exports and opened up arbitrage opportunities.

In a sign demand for ANS has increased, BP Plc recently chartered a foreign-flagged vessel to ship the crude to Asia. ANS is mostly transported to the U.S. West Coast on U.S.-flagged vessels.

Supply of the Alaskan crude rose in July and widened its discount to Brent, opening the arbitrage window for the oil to head east.

"Refinery issues in the U.S. West Coast and maintenance for ANS (oilfield) ended earlier than expected," a trader said, adding that the two factors combined led to a rise in ANS supplies available for other markets.

In addition, close to 5 million barrels of Oman crude and Russian ESPO oil arrived at the U.S. West Coast in July, data on Thomson Reuters Eikon showed, replacing some of the demand for ANS.

ANS crude loading in July traded as low as $3.50 a barrel below benchmark grade Brent, equivalent to about parity to Middle East benchmark Dubai quotes, Reuters data showed.

In Asia, comparable grade Russian ESPO traded at premiums of $2 to $3 a barrel to Dubai quotes for July.

Unipec bought an ANS crude cargo which will load this month, the sources said. Chinaoil, the trading arm of PetroChina, has also enquired about ANS prices, they said, although it was not immediately clear if they bought a cargo.

The companies do not comment on commercial matters.

Separately, Unipec has also purchased a cargo of U.S. heavy crude with a quality similar to a cargo it loaded in March, one of the sources said.

Reporting by Florence Tan

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